Master Power Purchase & Sale Agreement

Transcription

1 Master Power Purchase & Sale Agreement Version 2.1 (modified 4/25/00) COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association ALL RIGHTS RESERVED UNDER U.S. AND FOREIGN LAW, TREATIES AND CONVENTIONS AUTOMATIC LICENSE PERMISSION OF THE COPYRIGHT OWNERS IS GRANTED FOR REPRODUCTION BY DOWNLOADING FROM A COMPUTER AND PRINTING ELECTRONIC COPIES OF THE WORK. NO AUTHORIZED COPY MAY BE SOLD. THE INDUSTRY IS ENCOURAGED TO USE THIS MASTER POWER PURCHASE AND SALE AGREEMENT IN ITS TRANSACTIONS. ATTRIBUTION TO THE COPYRIGHT OWNERS IS REQUESTED.

2 MASTER POWER PURCHASE AND SALES AGREEMENT TABLE OF CONTENTS COVER SHEET...1 GENERAL TERMS AND CONDITIONS...6 ARTICLE ONE: GENERAL DEFINITIONS...6 ARTICLE TWO: TRANSACTION TERMS AND CONDITIONS Transactions Governing Terms Confirmation Additional Confirmation Terms Recording...12 ARTICLE THREE: OBLIGATIONS AND DELIVERIES Seller s and Buyer s Obligations Transmission and Scheduling Force Majeure...13 ARTICLE FOUR: REMEDIES FOR FAILURE TO DELIVER/RECEIVE Seller Failure Buyer Failure...13 ARTICLE FIVE: EVENTS OF DEFAULT; REMEDIES Events of Default Declaration of an Early Termination Date and Calculation of Settlement Amounts Net Out of Settlement Amounts Notice of Payment of Termination Payment Disputes With Respect to Termination Payment Closeout Setoffs Suspension of Performance...16 ARTICLE SIX: PAYMENT AND NETTING Billing Period Timeliness of Payment Disputes and Adjustments of Invoices Netting of Payments Payment Obligation Absent Netting Security Payment for Options Transaction Netting...18 i Version 2.1 (modified 4/25/00) COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association

3 ARTICLE SEVEN: LIMITATIONS Limitation of Remedies, Liability and Damages...18 ARTICLE EIGHT: CREDIT AND COLLATERAL REQUIREMENTS Party A Credit Protection Party B Credit Protection Grant of Security Interest/Remedies...22 ARTICLE NINE: GOVERNMENTAL CHARGES Cooperation Governmental Charges...23 ARTICLE TEN: MISCELLANEOUS Term of Master Agreement Representations and Warranties Title and Risk of Loss Indemnity Assignment Governing Law Notices General Audit Forward Contract Confidentiality...27 SCHEDULE M: GOVERNMENTAL ENTITY OR PUBLIC POWER SYSTEMS...28 SCHEDULE P: PRODUCTS AND RELATED DEFINITIONS...32 EXHIBIT A: CONFIRMATION LETTER...39 ii Version 2.1 (modified 4/25/00) COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association

4 MASTER POWER PURCHASE AND SALE AGREEMENT COVER SHEET This Master Power Purchase and Sale Agreement (Version 2.1; modified 4/25/00) ( Master Agreement ) is made as of the following date: ( Effective Date ). The Master Agreement, together with the exhibits, schedules and any written supplements hereto, the Party A Tariff, if any, the Party B Tariff, if any, any designated collateral, credit support or margin agreement or similar arrangement between the Parties and all Transactions (including any confirmations accepted in accordance with Section 2.3 hereto) shall be referred to as the Agreement. The Parties to this Master Agreement are the following: Article One: PacifiCorp ( Party A ) All Notices: Street: 825 NE Multnomah Street City: Portland, OR Attn: Contract Administration, Suite 600 Phone: (503) Facsimile: (503) Duns: Federal Tax ID Number: Invoices: Attn: Energy Operations Back Office, Suite 700 Phone: (503) Facsimile: (503) Scheduling: Attn: Energy Operations Back Office, Suite 700 Phone: (503) Facsimile: (503) Payments: Attn: PACA Controller, Suite 700 Phone: (503) Facsimile: (503) Wire Transfer: BNK: JPM Chase. ABA: ACCT: NAME: PacifiCorp Credit and Collections: Attn: Credit Risk Management, Suite 700 Phone: (503) Facsimile: (503) With additional Notices of an Event of Default or Potential Event of Default to: Attn: Jeffery B. Erb, Esq. and Jeremy D. Weinstein, Esq. Phone: (503) and (925) Facsimile: (503) and (925) General Terms and Conditions All Notices: ( Party B ) Street: City: Attn: Phone: Facsimile: Duns: Federal Tax ID Number: Invoices: Attn: Phone: Facsimile: Scheduling: Attn: Phone: Facsimile: Payments: Attn: Phone: Facsimile: Wire Transfer: BNK: ABA: ACCT: Credit and Collections: Attn: Phone: Facsimile: With additional Notices of an Event of Default or Potential Event of Default to: Attn: Phone: Facsimile: 1

5 Margining notices to Party A: Facsimile No: (503) With additional Notices of an Event of Default or Potential Event of Default to: Attn: Jeffery B. Erb, Esq. and Jeremy D. Weinstein, Esq. Phone: (503) and (925) Facsimile: (503) and (925) With additional Notices of an Event of Default or Potential Event of Default to: Attn: Phone: Facsimile: The Parties hereby agree that the General Terms and Conditions are incorporated herein, and to the following provisions as provided for in the General Terms and Conditions: Party A Tariff FERC Electric Tariff, Volume 12 Dated September 22, 2000 Docket Number ER Party B Tariff ; in each case, as such tariff may be revised from time to time. Article Two: Transaction Terms and Conditions Optional provision in Section 2.4. If not checked, inapplicable. Article Four: Remedies for Failure to Deliver or Receive Accelerated Payment of Damages. If not checked, inapplicable. Article Five: Events of Default; Remedies Cross Default for Party A: Party A: PacifiCorp Cross Default Amount $50,000,000 Other Entity: Cross Default Amount: $ Cross Default for Party B: Party B: [guarantor] Cross Default Amount $ Other Entity: [guarantor] Cross Default Amount $25,000, Closeout Setoff Option A (Applicable if no other selection is made.) Option B - Affiliates shall have the meaning set forth in the Agreement unless otherwise specified as follows: Option C (No Setoff) Article Eight: Credit and Collateral Requirements 8.1 Party A Credit Protection: 8.2 Party B Credit Protection: (a) Financial Information: (a) Financial Information: Option A Option A Option B Specify: Option B Specify: Option C Specify: Option C Specify: (b) Credit Assurances: (b) Credit Assurances: Not Applicable Not Applicable Applicable Applicable 8.1 Party A Credit Protection: 8.2 Party B Credit Protection: (c) Collateral Threshold: Not Applicable Applicable If applicable, complete the following: Party B Collateral Threshold: As determined by reference to Party B's Credit Rating in accordance with the table set forth below; provided, however, that Party B s Collateral Threshold shall be zero if an Event of Default or Potential Event of Default with respect to Party B has occurred and is continuing. (c) Collateral Threshold: Not Applicable Applicable If applicable, complete the following: Party A Collateral Threshold: As determined by reference to Party A's Credit Rating in accordance with the table set forth below; provided, however, that Party A s Collateral Threshold shall be zero if an Event of Default or Potential Event of Default with respect to Party A has occurred and is continuing. 2

6 A/ A2 and above A-/A3 BBB+/Baa1 BBB/Baa2 BBB-/Baa3 Watch negative BB+/Ba1 and below Party B Independent Amount: Party B Rounding Amount: $ million $ million $ million $ million $0.00 $0.00 $0.00 $ 100, A/ A2 and above A-/A3 BBB+/Baa1 BBB/Baa2 BBB-/Baa3 Watch negative BB+/Ba1 and below Party A Independent Amount: Party A Rounding Amount: $ million $ million $ million $ million $0.00 $0.00 $0.00 $100, (d) Downgrade Event: (d) Downgrade Event: Not Applicable Not Applicable Applicable Applicable If applicable, complete the following: If applicable, complete the following: It shall be a Downgrade Event for Party B if It shall be a Downgrade Event for Party A if Party B s Credit Rating falls below BBB- from Party A s Credit Rating falls below BBB- from S&P or Baa3 from Moody s or if Party B is S&P or Baa3 from Moody s or if Party A is not rated by either S&P or Moody s not rated by either S&P or Moody s Other: Other: Specify: Specify: (e) Guarantor for Party B: (e) Guarantor for Party A: Guarantee Amount: Guarantee Amount: Article Ten: Confidentiality Confidentiality Applicable If not checked, inapplicable. Schedule M Party A is a Governmental Entity or Public Power System Party B is a Governmental Entity or Public Power System Add Section 3.6. If not checked, inapplicable Add Section 8.6. If not checked, inapplicable Other Changes The following changes shall apply: Part 1. GENERAL TERMS AND CONDITIONS. 1. Article One: General Definitions: The following definitions are amended as follows: 1.1 Affiliate : Section 1.1 is amended to add to the end thereof: Notwithstanding the foregoing, in the case of Party A, Affiliate means MidAmerican Energy Holdings Company and its direct and indirect subsidiaries. 1.3 Bankrupt : Section 1.3 is amended to read: 1.3 "Bankrupt" means the Defaulting Party or any Guarantor of such Party: (i) Is dissolved (other than pursuant to a consolidation, amalgamation or merger); (ii) Becomes insolvent or is unable to pay its debts or fails or admits in writing its inability generally to pay its debts as they become due; (iii) Makes a general assignment, arrangement or composition with or for the benefit of its creditors; (iv) Institutes or has instituted against it a proceeding seeking a judgment of insolvency or bankruptcy or any other relief under any bankruptcy or insolvency law or other similar law affecting creditor's rights, or a petition is presented for its winding-up or liquidation; 3

7 (v) (vi) (vii) (viii) (ix) Has a resolution passed for its winding-up, official management or liquidation (other than pursuant to a consolidation, amalgamation or merger); Seeks or becomes subject to the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official for it or substantially all its assets; Has a secured party take possession of all or substantially all of its assets, or has a distress, execution, attachment, sequestration or other legal process is levied, enforced or sued on or against all or substantially all its assets; Causes or is subject to any event with respect to it which, under the applicable laws of any jurisdiction, has an analogous effect to any of the events specified in clauses one to seven inclusive; or Takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the foregoing acts "Credit rating": Sec is amended by deleting in the fourth line the word issues and replacing it with the word issuer Gains : Add the following after Costs) : calculated in a commercially reasonable manner based on the prime rate of interest as published from time to time under the Wall Street Journal for such period and such calculation will be equal to the net present value of the economic gain to it Losses : Add the following after Costs) : "calculated in a commercially reasonable manner based on the prime rate of interest as published from time to time under the Wall Street Journal for such period and such calculation will be equal to the net present value of the economic loss to it "Recording": Section 1.50 is revised to read as follows: Recording has the meaning set forth in Section "Replacement Price": Section 1.51 is amended by (a) adding "for delivery" immediately before "at the Delivery Point" in the second line and (b) replacing "at Buyer's option" in the fifth line with "absent a purchase" "Sales Price": Section 1.53 is amended by (i) deleting "at the Delivery Point" from the second line; (ii) deleting "at Seller s option" from the fifth line and replacing it with the following: absent a sale ; and (iii) inserting after commercially reasonable manner in the sixth line, the following: ; provided, however if the Seller is unable after using commercially reasonable efforts to resell all or a portion of the Product not received by Buyer, the Sales Price with respect to such unsold Product shall be deemed equal to zero (0)" "Specified Transaction": Article One is amended by inserting at the end the following new Section 1.62: 4

8 1.62 Specified Transaction means any contract or transaction (whether or not documented under or effected pursuant to a master agreement) now existing or hereafter entered into between Party A (or any Guarantor of Party A) and Party B (or any Guarantor of Party B or any Affiliate of Party B). 1.63: Rules of Construction. Article One is amended by inserting at the end the following new Section 1.63: 1.63 Rules of Construction. Or is not necessarily exclusive. Hereof, herein, hereunder, and similar words refer to this Agreement in its entirety. Articles, Section and Exhibits refer to Articles, Sections and Exhibits hereof unless otherwise stated or indicated. Including is not limiting and means including without limitation. The singular includes the plural, and vice versa, as the context allows. All references to a particular entity, statute, or market price index include a reference to such entity s, statute s or index s successors and (if applicable) permitted assigns. 2. Prior Transactions. The following is added as a separate second paragraph of Section 2.2: "Party A and Party B confirm that this Master Agreement shall supersede and replace all prior agreements between the parties hereto with respect to the subject matter hereof, including the Western Systems Power Pool Agreement, and the Power Sales Agreement dated. Party A and Party B confirm the terms of those Transactions referenced on Exhibit B hereto as evidenced by the written confirmations with respect thereto, and agree that such Transactions are, effective as of the Effective Date, governed by this Master Agreement, and are part of the single integrated agreement between the Parties consistent with the first paragraph of this Section 2.2." 3. Market Redesign. A new Section 3.4 shall be added as follows: "3.4: Market Redesign. In the event the current definition of the Delivery Point set forth in a Transaction is modified, redefined, replaced or eliminated in the transmission provider s or other applicable tariff, the parties agree to promptly negotiate in good faith to designate an alternate Delivery Point that reasonably approximates the characteristics of the originally designated Delivery Point so that the parties shall be in the same economic position after such designation as they were at the time the parties entered into such Transaction, or as mutually agreed to by the parties. " 4. Suspension of Performance. A new Section 4.3 is added to Article Four, worded as follows: "4.3 Suspension of Performance. Notwithstanding, and in addition to the remedies provided pursuant to Sections 4.1, 4.2 and 5.7, if Seller or Buyer fails to schedule, deliver or receive all or part of the Product pursuant to a Transaction for a period of three (3) or 5

9 more consecutive days, and such failure is not excused under the terms of this Agreement, by the other Party s failure to perform or by agreement of the Parties, then upon one (1) Business Day prior notice, and for so long as the non-performing Party fails to perform, the performing Party shall have the right to suspend its performance under such Transaction. In the event the performing Party suspends performance pursuant to this Section 4.3, it shall not be obligated to resume performance until it has received notice from the nonperforming Party at least one (1) Business Day prior to the date upon which the nonperforming Party intends to resume its performance; provided that, if the performing Party has entered into a replacement contract with a term of 31 days or less, the performing Party may resume performance at the end of the term of such replacement contract. Remedies available under this provision to the performing Party are in addition to, not in replacement for, other remedies specified in this Agreement." 5. Events of Default. Section 5.1(f) is amended by adding or its Guarantor immediately after the word Party on the first line and changing "of such Party under this Agreement" to "of such entity with respect to this Agreement" in line five. Section 5.1 is further amended by inserting the following new subsections (i), (j) and (k) at the end: (i) the occurrence with respect to such Party of an Event of Default (howsoever defined) under a Specified Transaction; (j) if, during any consecutive 90 day period under any Transaction, there have occurred 5 or more Seller Failures as that term is used in Section 4.1, regarding which the Seller shall be deemed to be the Defaulting Party and regarding which Buyer shall also be entitled to its remedies under Section 4.1; (k) if, during any consecutive 90 day period under any Transaction, there have occurred 5 or more Buyer Failures as that term is used in Section 4.2, regarding which the Buyer shall be deemed to be the Defaulting Party and regarding which Seller shall also be entitled to its remedies under Section Declaration of an Early Termination Date and Calculation of Settlement Amounts. Section 5.2 is deleted in its entirety and replaced with the following: "5.2 "Effect of Event of Default." If at any time an Event of Default with respect to a Defaulting Party has occurred and is continuing, the Non-Defaulting Party may do one or more of the following: (a) withhold any payments due to the Defaulting Party under this Agreement; (b) suspend performance due to the Defaulting Party under this Agreement; and/or (c) by giving not more than twenty (20) days notice, designate a day not earlier than the day such notice is effective as an Early Termination Date in respect of all outstanding Transactions (each referred to as a "Terminated Transaction"). The Non- Defaulting Party shall calculate, in a commercially reasonable manner, a Settlement Amount for each such Terminated Transaction as of the Early Termination Date (or, to the extent that in the reasonable opinion of the Non-Defaulting Party certain of such Terminated Transactions are commercially impracticable to liquidate and terminate or may not be liquidated and terminated under applicable law on the Early Termination Date, then each such Transaction (individually, an "Excluded Transaction" and collectively, the "Excluded Transactions") shall be terminated as soon thereafter as reasonably practicable, and upon termination shall be deemed to be a Terminated Transaction and the Termination Payment payable in connection with all such Transactions shall be calculated in accordance with Section 5.3 below. The Gains and 6

10 Losses for each Terminated Transaction shall be determined by calculating the amount that would be incurred or realized to replace or to provide the economic equivalent of the remaining payments or deliveries in respect of that Terminated Transaction. The Non- Defaulting Party (or its agent) may determine its Gains and Losses by reference to information either available to it internally or supplied by one or more third parties including, without limitation, quotations (either firm or indicative) of relevant rates, prices, yields, yield curves, volatilities, spreads or other relevant market data in the relevant markets. Third parties supplying such information may include, without limitation, dealers in the relevant markets, end-users of the relevant product, information vendors and other sources of market information." 7. Net Out of Settlement Amount. Section 5.3 is amended by inserting plus, at the option of the Non-Defaulting Party, any cash or other form of security then available to the Defaulting Party pursuant to Article Eight," between the words that are due to the Non-Defaulting Party, and plus any and all other amounts in the sixth line. 8. Notice of Payment of Termination Payment. The following is added to the end of Section 5.4: "Notwithstanding any provision to the contrary contained in this Agreement, the Non- Defaulting Party shall not be required to pay to the Defaulting Party any amount under Article 5 until the Non-Defaulting Party receives confirmation satisfactory to it in its reasonable discretion (which may include an opinion of its counsel) that all other obligations of any kind whatsoever of the Defaulting Party to make any payments to the Non-Defaulting Party under this Agreement or otherwise which are due and payable as of the Early Termination Date (including for these purposes amounts payable pursuant to Excluded Transactions) have been fully and finally performed." 9. Billing Period. Section 6.1 is amended by replacing each Party will render to the other Party in the last sentence with the Party owing the lesser amount as determined pursuant to standard wholesale electric industry after-the-fact check-out procedures for the point of delivery associated with each Transaction ("check-out procedures" means the coordination between the assigned representative for each respective party as soon as practicable in the calendar month following each delivery day pursuant to any given transaction) will transmit to the other Party" 10. Timeliness of Payment. Section 6.2 is amended by (1) replacing in the first sentence each party s with the Party owing the lesser amount as determined by pursuant to standard wholesale electric industry after-the-fact check-out procedures for the point of delivery associated with each Transaction ; (2) deleting from the second sentence:, or by other mutually agreeable method(s), ; and (3) adding the following sentence at the end: If on the due date, the aggregate amounts payable by a Party for failing to schedule and/or deliver or receive Product under Article Four with respect to all Transactions and Agreements after the expiration of the month covered by the invoice until and including the due date exceed $10,000.00, (i) the Party owed such amounts shall recalculate the amount payable and notify the other Party (by telephone, facsimile or other reasonable means), (ii) the due date shall be extended by five (5) 7

11 calendar days, and (iii) the recalculated amount payable shall be subject to the dispute procedures under Section Netting of Payments. Section 6.4 is amended by deleting and owing to each other on the same date. 12. Limitation of Remedies, Liability and Damages. The fifteenth and sixteenth lines of Section 7.1 are amended by deleting "UNLESS EXPRESSLY HEREIN PROVIDED,". 13. Uniform Commercial Code Disclaimer of Warranties. The following is added to the end of Article Seven: "7.2. UCC/Disclaimer of Warranties. To the extent that the provisions of the applicable Uniform Commercial Code ( UCC ) are deemed to apply to Transactions hereunder, and any Products deemed to be a good for the purposes of the UCC,PARTY A AND PARTY B EACH ACKNOWLEDGE THAT IT HAS ENTERED INTO THIS AGREEMENT AND IS CONTRACTING FOR THE PRODUCTS BASED SOLELY UPON THE EXPRESS REPRESENTATIONS AND WARRANTIES HEREIN AND, SUBJECT THERETO, ACCEPTS SUCH PRODUCTS AS-IS AND WITH ALL FAULTS. PARTY A AND PARTY B EACH EXPRESSLY DISCLAIM ANY OTHER REPRESENTATION OR WARRANTY, WRITTEN OR ORAL, EXPRESS OR IMPLIED, RELATING TO SUCH PRODUCTS, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY WITH RESPECT TO CONFORMITY TO MODELS OR SAMPLES, MERCHANTABILITY, OR FITNESS FOR ANY PARTICULAR PURPOSE. " 14. Article 8: Collateral Annex. In addition to Sections 8.1(c) and 8.2(c), the rights and obligations of the parties with respect to Performance Assurance as collateral shall be governed by the Collateral Annex, which is attached hereto and incorporated herein by reference. 15. Downgrade Event. Sections 8.1(d) and 8.2(d) are amended by adding after "receipt of notice": "or fails to maintain such Performance Assurance or guaranty or other credit assurance for so long as the Downgrade Event is continuing". 16. FDICIA Representation Add the following to the end: (xiii) it is a financial institution as defined in and pursuant to Title VI of the Federal Deposit Insurance Corporation Improvement Act of 1991 ( FDICIA ). Each Party intends that this Agreement constitute a netting contract as defined in and subject to FDICIA, and that each payment entitlement and payment obligation under this Agreement constitutes a covered contractual payment entitlement and covered contractual payment obligation, respectively, as defined in and subject to FDICIA. 17. No Investment Advice Given. Section 10.2(viii) is amended by adding to the end: ;information and explanations of the terms and conditions of each such Transaction shall not be considered investment or trading advice or a recommendation to enter into that Transaction; no 8

12 communication (written or oral) received from the other party shall be deemed to be an assurance or guarantee as to the expected results of that Transaction; and the other party is not acting as a fiduciary for or an adviser to it in respect of that Transaction; 18. FERC Order 888. The following is added to the end of Section 10.4: "Notwithstanding the foregoing or anything to the contrary herein, Party B may not use any provision of this Agreement, by set-off or otherwise, to hold PacifiCorp liable for any amounts (i) in excess of limitations of its transmission or distribution function's liability to Party B pursuant to the tariffs and other agreements of those functions with or applicable to Party B or (ii) respecting any act or omission by its transmission or distribution function." 19. Section 10.5 is amended to replace the word affiliate with the defined term Affiliate. 20. Jurisdiction. Section 10.6 is amended by inserting at its end the following new sentence: With respect to any proceeding in connection with any claim, counterclaim, demand, cause of action, dispute and controversy arising out of or relating to this Agreement, the parties hereby consent to the exclusive jurisdiction of the federal courts sitting in the borough of Manhattan in New York State. 21. Confidentiality. Section is amended by (a) adding "or the completed Cover Sheet to this Master Agreement" immediately before "to a third party"; (b) adding "or the Party's Affiliates'" immediately after "(other than the Party's"; (c) replacing have agreed to in the fifth line with who the Party is satisfied will ; (d) inserting or request by a regulatory authority in the seventh line between court or regulatory proceeding and ; provided, however, each Party shall, and (e) inserting at the end of Section 10.11: Notwithstanding the foregoing, it shall not be a breach of this Section if a Party discloses the terms or conditions of a Transaction, provided that the name of and any other identifying information relating to the other Party, including unique attributes and requirements, is redacted and otherwise not disclosed. 22. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY FURTHER WAIVES ANY RIGHT TO CONSOLIDATE ANY ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. 23. Index Transactions. The following provision is added as Section 10.12: a. Market Disruption. If a Market Disruption Event has occurred and is continuing during the Determination Period, the Floating Price for the affected Trading Day shall be determined pursuant to the Floating Price specified in the Transaction for the first Trading Day thereafter on which no Market Disruption Event exists; provided, however, if the Floating Price is not so determined within three (3) Business Days after the first Trading Day on which the Market Disruption Event occurred or existed, then the Parties shall negotiate in good faith to agree on a Floating Price (or a method for determining a Floating Price), and if the Parties have not so agreed on or before 9

13 the twelfth Business Day following the first Trading Day on which the Market Disruption Event occurred or existed, then the Floating Price shall be determined in good faith by PacifiCorp, by taking the average of four dealer quotes, two such quotes to be provided by each Party from dealers of the highest credit standing which satisfy all the criteria that the Seller applies generally at the time. "Determination Period" means each calendar month during the Delivery Period of the relevant Transaction; provided that if the term of the Transaction is less than one calendar month the Determination Period shall be the term of the Transaction. "Exchange" means the exchange or market, if any, specified in a Transaction. "Floating Price" means the price specified in the Transaction as being based upon a Price Source or specified index. "Market Disruption Event" means, with respect to an index, any of the following events: (a) the failure of the Price Source to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading in the relevant options contract or commodity on the Exchange; (c) the temporary or permanent discontinuance or unavailability of the Floating Price; (d) the temporary or permanent closing of any Exchange acting as the index; or (e) a material change in the formula for or the method of determining the Floating Price. "Price Source" means a publication or other reference, including an Exchange, containing or reporting a specified price or price index, or prices from which the specified price or price index is calculated, specified in the relevant Transaction. "Trading Day" means a day in respect of which the relevant Price Source published the relevant Floating Price. (b) Corrections to Published Prices. For purposes of determining the relevant prices for any day, if the price published or announced on a given day and used or to be used to determine a relevant price is subsequently corrected and the correction is published or announced by the person responsible for that publication or announcement, either Party may notify the other Party of (i) that correction and (ii) the amount (if any) that is payable as a result of that correction. If a Party gives notice that an amount is so payable, the Party that originally either received or retained such amount will, not later than three (3) Business Days after the effectiveness of that notice, pay, subject to any applicable conditions precedent, to the other Party that amount, together with interest at the Interest Rate for the period from and including the day on which payment originally was (or was not) made to but excluding the day of payment of the refund or payment resulting from that correction. (c) Calculation of Floating Price. For the purposes of the calculation of a Floating Price, all numbers shall be rounded to three (3) decimal places. If the fourth (4 th ) decimal number is five (5) or greater, then the third (3 rd ) decimal number shall be increased by one (1), and if the fourth (4 th ) decimal number is less than five (5), then the third (3 rd ) decimal number shall remain unchanged. 10

14 24. Netting and Setoff. (1) Termination of Specified Transactions. The occurrence or designation of an Early Termination Date on account of an Event of Default with respect to a party hereto ( Y ) shall constitute a material breach and event of default (howsoever described) under all Specified Transactions to which Y is a party, whereupon the Non-defaulting Party ( X ) shall have the right to terminate, liquidate and otherwise close out any such Specified Transactions (and Y shall be liable for any damages suffered by X as a result thereof). (2) Setoff. (a) Upon the occurrence or designation of an Early Termination Date on account of an Event of Default respect to a party hereto. in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) under applicable law, the Non-defaulting Party ("X") may, without prior notice to any person, at its option and in its discretion, (1) setoff, against any amount or obligation (whether matured or unmatured and irrespective of the currency, place of payment or booking office of the sum or obligation) owed to the Defaulting Party ("Y") in Dollars or any other currency by X under this Agreement or any other contract or agreement between the Parties: (a) any amount or obligation (whether matured or unmatured and irrespective of the currency, place of payment or booking office of the sum or obligation) owed in Dollars or any other currency by Y to X under this Agreement or other contract or agreement between Party A and Party B, or (b) any amounts due any Affiliate of X from Y under any present or future contract or agreement between Y and any Affiliate of X (each an Affiliate Netted Agreement ), and (2) set-off or cause the setoff against any amounts due from Y under this Agreement or other contract or agreement between Party A and Party B: (a) any amounts due to Y under any this Agreement or other contract or agreement between Party A and Party B, or (b) any amounts due to Y from any Affiliate of X under any Affiliate Netted Agreement. The obligations of Y and X under this Agreement in respect of such amount or obligation shall be deemed satisfied and discharged to the extent of any such setoff. If any obligation is unliquidated, X may in good faith, estimate that obligation and setoff in respect of the estimate, subject to X or Y, as the case may be, accounting to the other party when the obligation is liquidated. X will give Y notice of any setoff effected under this section but failure to give such notice shall not affect the validity of the setoff. (b) For purposes of the foregoing, X shall be entitled to convert any obligation denominated in one currency into another at such rates of exchange as it deems appropriate in good faith and in a commercially reasonable manner, to convert any obligation to deliver non-cash property into an obligation to deliver cash in an amount determined by it as it deems appropriate in good faith and in a commercially reasonable manner, and amounts may be set off and recouped irrespective of the currency, place of payment or booking office of any obligation to or from Y. (c) If an obligation is unascertained, X may in good faith estimate that obligation and set off and recoup in respect of that estimate, subject to the relevant party s accounting to the other(s) when the obligation is ascertained. 11

15 (d) Nothing in this subsection shall be effective to create a charge or other security interest. This setoff provision shall be without prejudice and in addition to any right of setoff, recoupment, combination of accounts, lien or other right to which any party is at any time otherwise entitled (whether by operation of law, contract or otherwise). Each provision of this clause shall be severable from every other provision when determining its legal enforceability. (3) Condition Precedent to Payments to the Defaulting Party. All obligations of a Nondefaulting Party ( X ) under this Agreement, any Specified Transaction with the other party ( Y ) or in respect of any other matured, liquidated or terminated obligation to Y are subject to the condition precedent that Y shall have performed all of its obligations to X under this Agreement, any Specified Transaction with X and in respect of any other matured, liquidated or terminated obligation of Y to X or any Affiliate of X, whether or not contingent and regardless of the currency, place of payment or booking office of the obligation. (4) Single Relationship. The parties intend that all Transactions and Specified Transactions shall be treated as mutual and part of a single, indivisible contractual and business relationship. Part 2. SCHEDULE P 1. Schedule P, Products and Related Definitions is modified by inserting the following at its end: Other Products and Service Levels: If the Parties agree to a service level defined by a different agreement (e.g., the WSPP Agreement, the ERCOT Wholesale Electricity Enabling Agreement, etc.) for a particular Transaction, then, unless the Parties expressly state and agree that all the terms and conditions of such other agreement will apply, such reference to a service level/product shall be defined by such other agreement, including, if applicable, the regional reliability requirements and guidelines as well as the excuses for performance, Force Majeure, Uncontrollable Forces, or other such excuses applicable to such other agreement, to the extent inconsistent with the terms of this Agreement, but all other terms and conditions of this Agreement shall remain applicable including, without limitation, Section The following definitions are added to Schedule P: "CAISO Energy" means with respect to a Transaction, a Product under which the Seller shall sell and the Buyer shall purchase a quantity of energy equal to the hourly quantity without Ancillary Services (as defined in the Tariff) that is or will be scheduled as a schedule coordinator to schedule coordinator transaction pursuant to the applicable tariff and protocol provisions of the California Independent System Operator ("CAISO") (as amended from time to time, the "Tariff") for which the only excuse for failure to deliver or receive is an "Uncontrollable Force" (as defined in the Tariff). 12

16 "West Firm" means with respect to a Transaction, a Product that is or will be scheduled as firm energy consistent with the most recent rules adopted by the WECC and service schedules defined by the WSPP for which the only excuses for failure to deliver or receive are if an interruption is (i) due to an Uncontrollable Force as provided in Section 10 of the WSPP Agreement; or (ii) where applicable, to meet Seller's public utility or statutory obligations to its customers. Notwithstanding any other provision in this Agreement, if Seller exercises its right to interrupt to meet its public utility or statutory obligations, Seller shall be responsible for payment of damages for failure to deliver firm energy as provided in Article 4 of this Agreement. "WECC" means the Western Electricity Coordinating Council. "WSPP" means the Western Systems Power Pool. "WSPP Agreement" means the Western Systems Power Pool Agreement as amended from time to time. IN WITNESS WHEREOF, the Parties have caused this Master Agreement to be duly executed as of the date first above written. PACIFICORP ("Party A") By: Name: Title: ("Party B") By: Name: Title: DISCLAIMER: This Master Power Purchase and Sale Agreement was prepared by a committee of representatives of Edison Electric Institute ( EEI ) and National Energy Marketers Association ( NEM ) member companies to facilitate orderly trading in and development of wholesale power markets. Neither EEI nor NEM nor any member company nor any of their agents, representatives or attorneys shall be responsible for its use, or any damages resulting therefrom. By providing this Agreement EEI and NEM do not offer legal advice and all users are urged to consult their own legal counsel to ensure that their commercial objectives will be achieved and their legal interests are adequately protected. 13

17 GENERAL TERMS AND CONDITIONS ARTICLE ONE: GENERAL DEFINITIONS 1.1 Affiliate means, with respect to any person, any other person (other than an individual) that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such person. For this purpose, control means the direct or indirect ownership of fifty percent (50%) or more of the outstanding capital stock or other equity interests having ordinary voting power. 1.2 Agreement has the meaning set forth in the Cover Sheet. 1.3 Bankrupt means with respect to any entity, such entity (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or commenced against it, (ii) makes an assignment or any general arrangement for the benefit of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (v) is generally unable to pay its debts as they fall due. 1.4 Business Day means any day except a Saturday, Sunday, or a Federal Reserve Bank holiday. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time for the relevant Party s principal place of business. The relevant Party, in each instance unless otherwise specified, shall be the Party from whom the notice, payment or delivery is being sent and by whom the notice or payment or delivery is to be received. 1.5 Buyer means the Party to a Transaction that is obligated to purchase and receive, or cause to be received, the Product, as specified in the Transaction. 1.6 Call Option means an Option entitling, but not obligating, the Option Buyer to purchase and receive the Product from the Option Seller at a price equal to the Strike Price for the Delivery Period for which the Option may be exercised, all as specified in the Transaction. Upon proper exercise of the Option by the Option Buyer, the Option Seller will be obligated to sell and deliver the Product for the Delivery Period for which the Option has been exercised. 1.7 Claiming Party has the meaning set forth in Section Claims means all third party claims or actions, threatened or filed and, whether groundless, false, fraudulent or otherwise, that directly or indirectly relate to the subject matter of an indemnity, and the resulting losses, damages, expenses, attorneys fees and court costs, whether incurred by settlement or otherwise, and whether such claims or actions are threatened or filed prior to or after the termination of this Agreement. 1.9 Confirmation has the meaning set forth in Section Version 2.1 (modified 4/25/00) COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association

18 1.10 Contract Price means the price in $U.S. (unless otherwise provided for) to be paid by Buyer to Seller for the purchase of the Product, as specified in the Transaction Costs means, with respect to the Non-Defaulting Party, brokerage fees, commissions and other similar third party transaction costs and expenses reasonably incurred by such Party either in terminating any arrangement pursuant to which it has hedged its obligations or entering into new arrangements which replace a Terminated Transaction; and all reasonable attorneys fees and expenses incurred by the Non-Defaulting Party in connection with the termination of a Transaction Credit Rating means, with respect to any entity, the rating then assigned to such entity s unsecured, senior long-term debt obligations (not supported by third party credit enhancements) or if such entity does not have a rating for its senior unsecured long-term debt, then the rating then assigned to such entity as an issues rating by S&P, Moody s or any other rating agency agreed by the Parties as set forth in the Cover Sheet Cross Default Amount means the cross default amount, if any, set forth in the Cover Sheet for a Party Defaulting Party has the meaning set forth in Section Delivery Period means the period of delivery for a Transaction, as specified in the Transaction Delivery Point means the point at which the Product will be delivered and received, as specified in the Transaction Downgrade Event has the meaning set forth on the Cover Sheet Early Termination Date has the meaning set forth in Section Effective Date has the meaning set forth on the Cover Sheet Equitable Defenses means any bankruptcy, insolvency, reorganization and other laws affecting creditors rights generally, and with regard to equitable remedies, the discretion of the court before which proceedings to obtain same may be pending Event of Default has the meaning set forth in Section FERC means the Federal Energy Regulatory Commission or any successor government agency Force Majeure means an event or circumstance which prevents one Party from performing its obligations under one or more Transactions, which event or circumstance was not anticipated as of the date the Transaction was agreed to, which is not within the reasonable control of, or the result of the negligence of, the Claiming Party, and which, by the exercise of due diligence, the Claiming Party is unable to overcome or avoid or cause to be avoided. Force Majeure shall not be based on (i) the loss of Buyer s markets; (ii) Buyer s inability economically 7 Version 2.1 (modified 4/25/00) COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association

19 to use or resell the Product purchased hereunder; (iii) the loss or failure of Seller s supply; or (iv) Seller s ability to sell the Product at a price greater than the Contract Price. Neither Party may raise a claim of Force Majeure based in whole or in part on curtailment by a Transmission Provider unless (i) such Party has contracted for firm transmission with a Transmission Provider for the Product to be delivered to or received at the Delivery Point and (ii) such curtailment is due to force majeure or uncontrollable force or a similar term as defined under the Transmission Provider s tariff; provided, however, that existence of the foregoing factors shall not be sufficient to conclusively or presumptively prove the existence of a Force Majeure absent a showing of other facts and circumstances which in the aggregate with such factors establish that a Force Majeure as defined in the first sentence hereof has occurred. The applicability of Force Majeure to the Transaction is governed by the terms of the Products and Related Definitions contained in Schedule P Gains means, with respect to any Party, an amount equal to the present value of the economic benefit to it, if any (exclusive of Costs), resulting from the termination of a Terminated Transaction, determined in a commercially reasonable manner Guarantor means, with respect to a Party, the guarantor, if any, specified for such Party on the Cover Sheet Interest Rate means, for any date, the lesser of (a) the per annum rate of interest equal to the prime lending rate as may from time to time be published in The Wall Street Journal under Money Rates on such day (or if not published on such day on the most recent preceding day on which published), plus two percent (2%) and (b) the maximum rate permitted by applicable law Letter(s) of Credit means one or more irrevocable, transferable standby letters of credit issued by a U.S. commercial bank or a foreign bank with a U.S. branch with such bank having a credit rating of at least A- from S&P or A3 from Moody s, in a form acceptable to the Party in whose favor the letter of credit is issued. Costs of a Letter of Credit shall be borne by the applicant for such Letter of Credit Losses means, with respect to any Party, an amount equal to the present value of the economic loss to it, if any (exclusive of Costs), resulting from termination of a Terminated Transaction, determined in a commercially reasonable manner Master Agreement has the meaning set forth on the Cover Sheet Moody s means Moody s Investor Services, Inc. or its successor NERC Business Day means any day except a Saturday, Sunday or a holiday as defined by the North American Electric Reliability Council or any successor organization thereto. A NERC Business Day shall open at 8:00 a.m. and close at 5:00 p.m. local time for the relevant Party s principal place of business. The relevant Party, in each instance unless otherwise specified, shall be the Party from whom the notice, payment or delivery is being sent and by whom the notice or payment or delivery is to be received. 8 Version 2.1 (modified 4/25/00) COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association

20 1.32 Non-Defaulting Party has the meaning set forth in Section Offsetting Transactions mean any two or more outstanding Transactions, having the same or overlapping Delivery Period(s), Delivery Point and payment date, where under one or more of such Transactions, one Party is the Seller, and under the other such Transaction(s), the same Party is the Buyer Option means the right but not the obligation to purchase or sell a Product as specified in a Transaction Option Buyer means the Party specified in a Transaction as the purchaser of an option, as defined in Schedule P Option Seller means the Party specified in a Transaction as the seller of an option, as defined in Schedule P Party A Collateral Threshold means the collateral threshold, if any, set forth in the Cover Sheet for Party A Party B Collateral Threshold means the collateral threshold, if any, set forth in the Cover Sheet for Party B Party A Independent Amount means the amount, if any, set forth in the Cover Sheet for Party A Party B Independent Amount means the amount, if any, set forth in the Cover Sheet for Party B Party A Rounding Amount means the amount, if any, set forth in the Cover Sheet for Party A Party B Rounding Amount means the amount, if any, set forth in the Cover Sheet for Party B Party A Tariff means the tariff, if any, specified in the Cover Sheet for Party A Party B Tariff means the tariff, if any, specified in the Cover Sheet for Party B Performance Assurance means collateral in the form of either cash, Letter(s) of Credit, or other security acceptable to the Requesting Party Potential Event of Default means an event which, with notice or passage of time or both, would constitute an Event of Default Product means electric capacity, energy or other product(s) related thereto as specified in a Transaction by reference to a Product listed in Schedule P hereto or as otherwise specified by the Parties in the Transaction. 9 Version 2.1 (modified 4/25/00) COPYRIGHT 2000 by the Edison Electric Institute and National Energy Marketers Association